Are you an online retailer who runs a subscription-based business model? Ben Parkin offers seven great tips to make sure that your customers don't hit the unsubscribe button anytime soon.
The rise of subscription shopping has truly revolutionised e-commerce. Customers love the convenience of receiving regular supplies of groceries and other essentials, without having to worry about stocking up on these items from a brick-and-mortar store. What else can explain the popularity of subscription boxes?! From razors to socks, and even their favourite bottle of Merlot, it seems like online retailers are only too happy to package and ship any kind of products to their customers at regular intervals.
Subscription e-commerce is great for the seller too. It offers a predictable, recurring revenue stream for businesses which helps mitigate financial uncertainty. The approach also allows e-commerce business owners to manage their inventory more effectively, reducing wastage and optimising their stock. Subscription-based business models also overcome drawbacks from other business models, and offer a non-intrusive way of billing the customer.
However, with the rise of subscription e-commerce, it has also become very difficult for companies to retain customer loyalty due to the amount of competition. Gone are the days when subscription-based businesses were the lone wolves in a single category. Today, there are tons of subscription-based businesses fighting for the same set of customers. So, how do you ensure that your subscribed customers stay with you forever? Here are seven things that subscription-based e-commerce businesses must do to retain their customers:
Flexible subscription payment models –
It's always a good idea to offer your customers a choice. Give them options to pay through different automated methods such as direct debit and other continuous payment gateways. You can also think of offering different recurring billing
frequencies such as monthly, quarterly, bi-annually and annually. It is equally important to invest in the right recurring revenue management systems that can support these functionalities. Traditional on-premise billing systems are typically not agile enough to handle such requirements, whereas cloud billing solutions
can give subscription-based businesses the necessary firepower to start small and grow quickly.
Seamless subscription billing –
If there is one name that comes to mind in this regard, it must be Netflix. For all of you subscribed to the service, do you remember the date your subscription fees are collected? Or the total amount paid? Most of you won't, because Netflix has mastered the art of subtle, consistent and seamless billing. Businesses which keep sending emailers for payments or adopt intrusive ways typically lose out in this game. The aim should be to create a billing relationship that makes it so easy for customers to buy services from you, that they won’t look anywhere else.
Top-of-the-line customer service –
Your customer service reps must be willing and empowered to go to any length to help your customers. The most loved businesses have the friendliest customer reps. Otherwise, it doesn't take too long for an irate customer to go and vent their frustration on social media, leading to a negative brand perception for your business.
Flawless warehouse operations –
Due to a high volume of shipping involved with subscription-box businesses, it is essential to have the right subscription systems and processes in place. The best businesses pay a lot of attention to this aspect since it can hugely impact customer experience, especially while tracking the package or dealing with lost/exchanged goods. Investing in a fulfilment service can also be extremely helpful to handle the 'dirty' part of e-commerce.
– Discounts are also a great way to increase customer lifetime value. You can offer serious customers additional value by giving them a discount on long-term subscriptions and rewarding them for their loyalty. This will help you expand your revenue base, and keep the customers vested in your ecosystem.
Data Analytics –
Thanks to the dynamic nature of subscription-based businesses, it is important to constantly monitor and analyse key performance indicators related to your business. Metrics such as cost of acquisition, average revenue per user, monthly recurring revenue, retention rate and customer lifetime value are the main metrics to keep an eye on. This gives you great insights into your business performance and will help to keep you on the right track.
– Innovation is at the heart of subscription-based business models. Be it through new pricing mechanisms, innovative customer outreach programs or investments in technology, continue your digital transformation at speed to ensure that you stay ahead of the competition. Remember - customers always flock to the leaders of the pack!
Also, read this blog on the six subscription business trends driving the marketplace in 2017.